Definition of a Pivot
In the book The Lean Startup, author Eric Ries describes a pivot as “a structured course correction designed to test a new fundamental hypothesis about the product, strategy and engine of growth.”
In business, we use the term “pivot” to refer to a sudden change in strategy that takes the company in a new direction. These normally come about because the market has changed or new information has come to light that changes the way that you perceive your business.
History of Pivots in Business
The history of business is replete with great examples of pivots, as well as examples of when a company should have pivoted but didn’t.
Blockbuster Video comes to mind, which could have survived if it had pivoted its business model and moved to online rental and streaming.
When Starbucks started out in the 1970s, it sold espresso machines and coffee beans, but it later pivoted to actually selling coffee and the rest is history.
Flickr started out as an online game that happened to offer photo sharing, and when executives realized that this was by far the most popular aspect of their site, they pivoted to becoming a photo sharing app.
Companies often pivot because they’ve found a way to better serve their customers or they’ve spotted a new target audience that they can cater to. Oftentimes, they choose to pivot because they realize that by doing so, they can drastically improve the amount of money that they’re able to generate.
Pivots can be large or small
The examples that we shared above are examples of large-scale pivots, because they drastically changed both the way that the companies were set up and the kind of business that they carried out. Smaller pivots could be as simple as changing the price of your products/services to target a different segment of the market.
Pivoting is very common with startups
Pivoting is relatively common throughout the entirety of the business world, but it’s particularly common amongst the start-up community. That’s because start-ups are in the best possible place to move quickly and to change the way that they work, and the founders often have a number of different ideas to try out before they settle on the perfect product/market fit.
Instagram is also a result of pivoting, starting out as an app called Burbn. The problem was that people were only using the app to post photos using the inbuilt filters, and so they pivoted to place that at the core of their application. They appreciated that it was better to focus on doing one thing really well than it was to keep adding new features that nobody wanted.
Pivoting arguably went mainstream during the COVID-19 pandemic, when companies of all shapes and sizes were forced to pivot to stay relevant. For example, public speakers had to pivot from speaking at in-person events to hosting online webinars, while most traditional offices had to pivot to adopt remote working.
Successfully pivoting requires a large amount of planning and a comprehensive understanding of your target audience. Arguably the biggest mistake that businesses make is when they pivot without checking that their customers will be interested in the new direction that the company plans to take.
Frequently asked questions about pivoting
The single biggest downside of pivoting is that it generally means backtracking and starting over again. It can require extensive amounts of reworking and set back your company’s development, but those downsides are generally offset by the huge amount of potential that’s on offer for companies that are able to successfully pivot.
The most important thing to think about when pivoting is that you need to make sure that the pivot prevents your company with an opportunity to grow its sales and its revenue. It’s also worth looking for ways to minimize the amount of work that you have to consign to the trash heap and to make sure that any changes that you do make are fully aligned with your vision for the company and its future.
The honest answer to this is that when it’s time for you to pivot, you’ll know. If you’re hesitant or you have any doubts, it’s probably not a good idea to pivot. It’s easy to think that pivoting will solve all of your problems, but it’s often best thought of as a last resort. If your company is struggling to remain competitive due to too much competition or an inability to keep up with the competitors that it has, it may be a sign that pivoting is your best option for long-term survival.